Crypto-News: National: Wednesday, June 20, 2018.
Ever since
the news broke that the Reserve bank of India (RBI) did not do its due diligence
before imposing restrictions on banks to not have a working relationship with
Indian crypto currency exchanges, there has been chaos in the community.
Like us, I am
sure our readers must have had a few queries pertaining to the central bank’s
perplexing stand. We reached out to some lawyers and asked them if the RBI had
any right to impose these restrictions in the country.
Although the
Right to Information response sent by the RBI answered a lot of pertinent
questions, it refused to answer a lot more. The standard reply to the difficult
questions, sent was, “What is sought is not information as defined in section
2(f) of the RTI Act 2005.”
To gain a
little context Section 2(f) of the RTI Act 2005 says, “Information” means any
material in any form, including records, documents, memos, e‑mails,
opinions, advices, press releases, circulars, orders, logbooks, contracts,
reports, papers, samples, models, data material held in any electronic form and
information relating to any private body which can be accessed by a public
authority under any other law for the time being in force.”
Does the
RBI have the authority to deny information to the public?
Darpan
Singhi, an Associate at TRA Law firm which is representing crypto-exchanges and
crypto-traders in their Supreme Court challenge to the RBI crypto-ban circular,
said, “Under the RTI Act, 2005, all public authorities are required to provide
information to the public. The RBI has responded to RTI applications in the
past unless it qualifies as an “exception” under the RTI Act. The only cases under
which the RBI can refuse to share such information are if the information is
(i)prejudicial to the sovereignty of India, (ii) forbidden from sharing by any
court, (iii) breaches parliament or state legislature privilege, (iv) is
against public interest etc. The RBI is required to answer all questions it
receives under the RTI Act, unless covered under one of the exemptions above.”
The questions
in the RTI application forms included, if there was no committee constituted by
the RBI (to study cryptocurrencies), how did it determine the risk, logical
comparisons of dangers associated with net banking, if the RBI ever tried to
understand how peer to peer technologies work, among others.
Apart from
that, was the RBI authorized to impose restriction on cryptocurrency trading?
Nehaa
Chaudhari, the Public Policy Lead at the same firm said said, “The RBI’s
authority to regulate the banking sector comes from two legislations – the
Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949. Neither
law contains any requirement that the RBI conduct research on any topic it
regulates. So, in that sense, there’s nothing illegal or unconstitutional here.
That said, however, for the regulation of crypto-currencies, the Ministry of
Finance has constituted two committees – the recommendations of the first
committee have not been made public, and those of the second committee are
awaited, as far as we know.”
She
elaborated that, in such a scenario, where the RBI is but one member of these
committees which have been constituted for the specific purpose of framing
recommendations on how to regulate crypto-currencies, this ban by the RBI is
problematic. The fact that they admit to issuing the ban without having done
any research makes it even more problematic. It’s also negatively affecting the
perception of the RBI, thus far perceived to be a largely responsible
regulator.
Crypto-News
India View:
Indian
government institutions do have the right to refuse to answer questions if
those questions endanger the sovereignty of our country, or if they have been
forbidden from sharing information by courts, or if it makes India look bad.
Since none of
these questions checked any of the criteria above, why the RBI chose to refrain
from answering burning questions, is a burning issue.
.JPG)
.JPG)
